Monday, July 9, 2012

Hard times for specialty hardware. iPhones replace hotel phones. What is next?

Yesterday we could read reports about Opus Hotel in Vancouver replacing their guest room phones with iPhones.

I bet that this to many people sounds like a publicity stunt that makes no business sense. I will explain why this makes perfect sense and how it is part of a larger ongoing trend that will radically change the whole specialty hardware industry.

On the face of it, using iPhones and iPads sounds like an expensive proposition when for example replacing guest room phones in a hotel with hundreds of rooms. However, when you start doing the math, taking into account the hardware cost for these specialty phones that go into hotels, the wired network throughout the building as well as the switching system and the maintenance costs just to keep everything running, I would bet it is a wash or even cheaper with the iPhones.

That means that you will on the cost side have a small saving or similar cost structure. But it does not end there. There is a significant upside to moving towards iDevices versus sticking to the old stuff.

The first issue is usability. Not too long ago I worked at an office where the standard office phone was a cordless DECT system which had tons of features specific to that very system, such as pre-recorded away messages, forwarding, conferencing, the works. There was just one small problem. Nobody under the age of 45 had any idea of how to use the features. They had grown up with cellphones and smart phones and knew how they worked but these office phones were an enigma. Hence, many people put their phones in a drawer, never to be seen again and happily used their company cellphones instead. This was not very cost effective.

People will use what works, not what is put in front of them. Since most people these days know how to use an iPhone or quite easily can figure it out, I'm sure this is a hit for the hotel.

Second, there is the possibility to introduce additional value adding functionality through software (Apps) on the iDevices. It may not be completely obvious today what changes may come in the future but since the iPhone and iPad offer a generic platform to add and modify services, it creates flexibility and unlimited possibilities to differentiate your service going forward.

In the not too distant future you will for example use an iPad to enter your payment information at Whole Foods instead of one of those useless POS terminals you see today while the cash register will be replaced by another iPad. This will enable the store to not only use the device for the exact same use as it has today but also to add additional functionality about offers, loyalty programs, informercials, god knows what. This is just one example.

If your company is contemplating upgrading or replacing POS systems, cash registers, office phones (PSTN or VoIP) or any other hardware, first consider this. Can we switch to an iDevice solution instead? It is going to save you money and create an upside that you didn't even knew was there.

If your company on the other hand is in the business of supplying said hardware. Start looking for a new job. Silicon Valley has just arrived. It is game over. Maybe not today or tomorrow, but much sooner than you think.